exv10w1






Exhibit 10.1




July 1, 2008



Mr. John J. Giamatteo

c/o RealNetworks, Inc.

2601 Elliott Avenue

Seattle, WA 98121




Dear John,




This letter amends and restates the terms of the letter dated June 24, 2008 related to
your promotion to Chief Operating Officer (“COO”) for RealNetworks, Inc. and acts as an
addendum to the original offer letter you received on May 24, 2005; all other terms of
employment that you previously agreed to will apply.



This promotion has been approved by the Board of Directors, and comes in recognition of
the outstanding work you have done at RealNetworks, Inc. since you joined RealNetworks
in 2005. Your new annual salary will be increased to $435,000 per annum (subject to
normal withholdings). It will take effect upon the receipt of the written formal
acceptance of this offer.



As part of this promotion, you will also continue to be eligible for the company’s
executive incentive MBO program, allowing you to earn an annual bonus of up to 100% of
your base salary, based on the achievement of specific business goals. As such, you are
eligible to earn $435,000 upon meeting these MBO business goals, for an annual targeted
total compensation of $870,000. The Comp Committee of the Board of Directors has
approved, in principle, a modification to your 2009 Executive MBO plan that will allow
for a potential maximum payout opportunity of 200%, depending on the achievement of
specified performance goals . Please note that your participation will remain in effect
only in those quarters during which you are employed as an executive on the first and
last day of the quarter.



You will receive two equity awards in connection with your appointment as COO of
RealNetworks. Upon your acceptance of the terms of this letter, stock options for the
purchase of 375,000 shares of RealNetworks Common Stock will be granted to you having an
exercise price equal to the closing price of RealNetworks Common Stock as reported on
NASDAQ on the date the options are granted (the “Grant Date”). These options will vest
as follows, and as set forth on Exhibit A (assuming continued employment with Real):
75,000 options will vest thirty months after the Grant Date, 75,000 options will vest
thirty-six months after the Grant Date, 112,500 options will vest forty-two months after
the Grant Date and the remaining 112,500 options will vest forty-eight months after the
Grant Date. In addition, 208,333 restricted stock units (“RSUs”) will be granted to you
on the Grant Date. The RSUs will vest as follows (assuming continued employment with
Real): 33,333 RSUs will vest twelve months after the Grant Date, 50,000 RSUs will vest
twenty-four months after the Grant Date, 25,000 RSUs will vest thirty months after the
Grant Date, 25,000 RSUs will vest thirty-six months after the Grant Date, 37,500 RSUs
will vest forty-two months after the Grant Date and the













 





remaining 37,500 RSUs will vest forty-eight months after the Grant Date. The stock
options and RSUs will be granted pursuant to the RealNetworks, Inc. 2005 Stock Incentive
Plan, as amended and restated (the “2005 Plan”), and will be subject to all of the terms
and conditions of the 2005 Plan and the agreement evidencing each equity award.



Additionally, in the event that Real decides to terminate your employment without cause
during the first two years of vesting for these RSU and stock option awards, there will
be accelerated vesting applicable to the RSUs and stock options as further described
herein. If your employment is terminated without cause during the first twelve months
following your promotion to COO (“Year 1”), 4,861 RSUs will become vested for each
completed month of employment during Year 1 in lieu of the 33,333 RSUs that would vest
on the first anniversary of your promotion. If your employment is terminated without
cause during the second twelve month period following your promotion to COO (“Year 2”),
25,000 RSUs will become vested, plus an additional 5,556 RSUs for each completed month
of employment during Year 2, in lieu of the 50,000 RSUs that would vest on the second
anniversary of your promotion. In addition, if your employment is terminated without
cause during Year 1, 6,250 options will become vested for each completed month of
employment during Year 1, and if such termination occurs during Year 2, 4,167 options
will become vested for each completed month of employment during Year 2 in addition to
75,000 options that would have become vested on the first anniversary of your promotion
to COO had such termination of employment occurred on such date. This accelerated
vesting will become effective on the date of termination of your employment without
cause.



As you are aware, Real currently expects to execute an initial public offering, spin-off
or other corporate transaction relating to its games business. You understand and
agree that any adjustments — if any adjustments are approved by the RealNetworks Board
of Directors — to the stock options described above to reflect any games business
transaction will affect only the exercise price of the options. Consequently, the
number of Real shares covered by the options will not be increased and the options will
not allow you to purchase any shares in the games business. Additionally, you will
receive RSU conversion treatment based on the regular approved formula at the time of
the games business transaction. However, the maximum conversion formula that will be
applied to this RSU grant is fifty percent of the original RSU grant. The foregoing
clause is applicable only to the stock option and RSU awards described herein and will
not apply to any stock option or RSU awards previously granted to you. The Compensation
Committee of Real’s Board of Directors has full discretion to determine any adjustments
that may or will made to your equity awards in order to reflect any games business
transaction or any other event. Any adjustments to your equity awards to reflect any
games business transaction may differ from those made to equity awards granted by Real
to other individuals.



In the event that Real terminates your employment without cause, Real will provide you
with twelve months notice or pay you your then-current base salary in lieu of notice
through any remaining portion of the notice period.



If you are a “specified employee” within the meaning of Section 409A of the Internal
Revenue Code (“Section 409A”) at the time you terminate employment (other than due to
your death), then any severance benefits payable to you under this offer, if any, and
any other severance payments or separation benefits that may be considered deferred
compensation under Section 409A (together, the “Deferred Compensation Separation
Benefits”) otherwise due to you on or within the six (6) month period following your













 





termination will accrue during such six (6) month period and instead will be payable in
a lump sum payment (less applicable withholding taxes) on the date six (6) months and
one (1) day following the date of your termination of employment. All subsequent
payments, if any, will be payable in accordance with the payment schedule applicable to
each payment or benefit. However, if you die following your termination but prior to
the six-month anniversary of your date of termination, then any payments delayed in
accordance with this paragraph will be payable in a lump sum (less applicable
withholding taxes) to your estate as soon as administratively practicable after the date
of your death and all other Deferred Compensation Separation Benefits will be payable in
accordance with the payment schedule applicable to each payment or benefit. It is the
intent of this offer to comply with the requirements of Section 409A so that none of the
severance payments and benefits to be provided hereunder will be subject to the
additional tax imposed under Section 409A, and any ambiguities herein will be
interpreted to so comply. Real and you agree to work together in good faith to consider
amendments to this offer and related documents to take such reasonable actions which are
necessary, appropriate or desirable to avoid imposition of any additional tax or income
recognition under Section 409A prior to actual payment to you.



John, please accept our congratulations on your new promotion. We look forward to your
continued contributions and future success in your new role.



Sincerely,




/s/ Robert Glaser




Robert Glaser

Chief Executive Officer

RealNetworks, Inc.




I have read and agree to the terms outlined in this promotional letter.




John Giamatteo: /s/ John J. Giamatteo




Date: 7/21/2008



















 








Exhibit A




RSU and Stock Option Vesting:




	 	 	 	 	 	 	 	 	 	 	 
	Months	 	RSU Vesting	 	Stock Option Vesting	 	 
	12

	 	 	33,333	 	 	 	 	 	 	 
	24

	 	 	50,000	 	 	 	 	 	 	 
	30

	 	 	25,000	 	 	 	75,000	 	 	 
	36

	 	 	25,000	 	 	 	75,000	 	 	 
	42

	 	 	37,500	 	 	 	112,500	 	 	 
	48

	 	 	37,500	 	 	 	112,500	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Total

	 	 	208,333	 	 	 	375,000